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GBPJPY Sitting on Key Support
GBPJPY price action is looking interesting here. The pair is essentially trading in range between 179.95 and 184.33, reflecting a pause in upside momentum on the back of the bull move off the YTD lows. We recently saw a failed downside break of the range, with the market quickly reversing higher to trade back above 179.95, suggesting that an eventual topside break is now the preferred play.
Shifting BOE Expectations
Last week, the BOE hiked rates by a further .25% while signalling that further tightening might still be coming. However, this was anmuch less unified meeting from the bank with some members voting in favour of a larger hike while some were in favour of holding rates unchanged. As such, there is clear two-way risk around GBP going forward. If inflation is seen to continue falling, this should reduce near-term BOE tightening expectations, pulling GBO lower. However, if CPI is seen showing stickiness at current level, hawkish BOE expectations should drive GBP higher near-term.
Caution Around BOJ
On the JPY side of the equation, the main focus is the BOJ. While the bank held policy unchanged at its latest meeting, it did make some operational tweaks (YCC band widened) which many have seen as potentially laying the groundwork for a forthcoming policy shift. If this narrative gains more traction, JPY might start to rally on hawkish BOJ expectations, creating downside pressure for the pair.
Technical Views
GBPJPY
For now, the pair is holding above the 179.95 level support. Despite the downside break of the bull channel, the outlook remains bullish while price holds above this support level, putting the focus on a break above the 184.33 level and a continuation higher. To the downside, the next support is 176.35, ahead of deeper support all the way below market at 172.13. Notably, we have an active buy signal in the Signal Centre today from 179.50, targeting a move back up through 182.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.